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Qualcomm’s EU Antitrust Appeal Likely to Take a While (Updated)

Qualcomm Inc. can expect to be answering questions about its appeal of the EU’s $1.2 billion competition fine against it for as long as six years, if history is any guide.

The company said it will appeal the fine issued in January by the EU Competition Commission over an illegal ploy to ensure only its chips were used in Apple Inc.’s iPhones and iPads. The fine, the EU’s third highest, comes as Qualcomm tries to fend off a $121 billion hostile takeover by rival Broadcom Ltd. and takes on Apple in numerous court cases around the world over patent licensing.

The appeal ensures that a resolution about whether and how much Qualcomm owes will be years in the future. Competition cases take about twice long as the average case, roughly three years, to work their way through the lower courts, EU statistics show. If the appeal goes further to the Court of Justice, tack on another few years. One case involving an Italian steel rebar cartel has been going on for 15 years.

Alfonso Lamadrid de Pablo, a Brussels-based competition lawyer at Garrigues, told Bloomberg Law that his firm’s analysis puts General Court cases, the lower court in the EU, between 24 and 36 months for a decision on appeal. “It is difficult to estimate the likely duration of any given case,” he said. “The duration of any given case will also depend on the number and volume of written briefs both from the main parties, as well as from eventual third parties.”

If either party further appeals to the Court of Justice, the highest court in the EU, the case could drag on another couple of years — resulting in a total of five to six years for a final determination, he said.

Brussels solicitor Kiran Desai, with the firm HVG advocaten-avocats, agreed that two years is a best case scenario for a complex case like Qualcomm’s. But he pointed out that the appeal would be further slowed if it’s stayed pending the outcome of the Competition Commission’s separate case against Intel Corp.

The commission decided in 2009 that Intel rebates and incentives to computer makers to favor its products violated competition law. In September the Court of Justice told the General Court to reconsider the commission’s $1.3 billion fine Intel for allegedly abusing its dominant position in the chip market. Intel’s case is now back before the General Court and may linger a year, he said.

Bottlenecks

There has been concerted effort to reduce the time it takes to resolve appeals in the EU. The EU legislature voted in December 2015 to double the number of judges on the General Court from 28 to 56, at a cost of 22.9 million euros ($28.3 million) a year, to alleviate bottlenecks.

They are making some progress in reducing case durations, but competition cases still stretch into years, the EU’s official statistics show. Cases of all types disposed of by judgment or order were pending for 18.7 months, on average in 2016, the last year for which full statistics from the EU are available. That’s 1.9 months less than the 20.6 months it took to dispose of the average case in 2015.

But competition cases are more complicated and take longer. The average competition law case took 38.2 months to make it through the General Court, according to 2016 EU statistics. That was a marked improvement from the average 47.7 months it took to complete a competition case before the same court in 2015.

The loser at the General Court can appeal to the Court of Justice. The average duration of proceedings before the Court of Justice in 2016 was 15 months. That “amounts to the shortest duration recorded for more than 30 years,” the 2016 annual report on judicial activity said. The Court of Justice didn’t break out statistics on the duration of competition cases.

Complicating matters, either the General Court or the Court of Justice can refer its decision back to the Competition Commission to review and reissue, causing the whole appellate process to restart.

Case Study: 15 Years

The individual steps in a case can add up to an extraordinary amount of time. For example, the Competition Commission first found against a number of companies that formed a cartel in Italian steel rebar in 2002. The biggest fine among the eight companies cited by the commission went to privately held Riva Acciaio SpA, at 26.9 million euros (about $27.2 million at the time). The General Court overturned the commission’s fine in 2007 because it said it was based on the wrong law. The commission reissued its fine under the right law in 2009, but that time, it didn’t grant the companies a new hearing. Ferriere Nord SpA, another alleged cartel member, appealed. The General Court then issued an opinion in April 2015, saying the new hearing wasn’t necessary. The Court of Justice overturned that second decision in September 2017, saying the commission needed to grant the companies a new hearing.

After 15 years of litigation, the competition commission and the parties are back to square one.

(Updates with comment from EU competition lawyer in the seventh and eighth paragraphs.)